Mrs Merkel’s coalition of the Christian Democratic Union (CDU) and the Christian Social Union (CSU) is now six percentage points clear, according to the latest poll by the Forsa Institute.
The coalition is currently in a strong position on 36 percent of the vote with Mr Schulz’s Social Democratic Party party the second most popular.
The news will come as a boost to the 62-year-old German leader who had been under fire over growing concerns about the future state of the economy and the migrant crisis, with German voters seemingly approving of her new tougher stance.
Martin Schulz and Angela Merkel are vying to govern Germany
Mrs Merkel will no doubt also be bolstered by her own standing in the personal approval ratings as she bids for a fourth term in office.
Among potential voters, Mrs Merkel had 43 percent support, compared to 32 percent for Mr Schulz.
Young Germans particularly seemed to be warming to the Chancellor with Mrs Merkel extending her lead to 47 percent against 29 percent among young voters aged between 18 and 21.
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Tue, February 14, 2017
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Protest on the sidelines of Angela Merkel's official visit in Brussels
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Head of the Forsa Institute Manfred Guellner said: "Young people know Chancellor Merkel, with whom they grew up, but not the candidate Schulz.”
He added the latest data showed "especially young people are looking for stability and continuity in these uncertain times".
A second survey by INSA for Bild am Sonntag gave the CDU/CSU a 1.5 point lead ahead of the September 24 national election.
German Chancellor Angela Merkel has regained the lead in the German opinion polls
The anti-immigrant Alternative for Germany (AfD) party, which had seen its support weaken in recent months, was at eight percent in the Forsa poll, adding one point to 10 per cent in the INSA poll.
The pro-business Free Democratic Party remains likely to return to parliament, gaining one percentage point to six per cent in the Forsa poll and 1.5 percentage points to 6.5 per cent in the INSA poll.
Both Mrs Merkel and Mr Schulz are hoping to form new governments with smaller parties, but the two polls suggested the "grand coalition" the two parties currently operate is likely to continue.
Mr Schulz said his centre-left party would be willing to form a coalition with anyone who was interested.
SPD leader Martin Schulz has seen his lead in the polls eroded over recent weeks
He told CNBC yesterday: "My goal is first of all to see the SPD, after the election, become the strongest political force in the country and for me to become the chancellor of the Federal Republic.”
He added: "Whoever is interested to join the government led by me is invited to join it after the election and to open a dialogue with me.”
The most recent regional election in the country would also indicate Mrs Merkel could be returned to power.
Saarland, in south-west Germany, saw a high voter turnout and a comfortable win for the CDU at the end of last month in the state election, suggesting the German people are averse to the leftist parties coming to power.